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4 April, 10:29

started 2018with total assets of $ 17 comma 000and total liabilities of $ 7 comma 000. At the end of 2018 , John'stotal assets stood at $ 10 comma 000and total liabilities were $ 6 comma 000. Requirements1. Did the stockholders' equity of John Landscapingincrease or decrease during 2018 ? By how much?2. Identify the four possible reasons that stockholders' equity can change.

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  1. 4 April, 13:53
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    Equity decrease by 6,000

    possible explanation:

    (A) Purchase of Treasury Stock will cause to:

    decrease cash (assets) and decrease equity

    if the company paid 1,000 liab and purchase 6,000 Treasury Stock

    This will generate the end 2018 values

    (B) long term assets totaled (destruction):

    Long term equipment was totaled and therefore the loss decrease the equity

    (C) net loss

    A net loss will decrease the assets and equity

    (D) cash dividends

    the company had most of his equity on retained earnings account, so it paid out cash dividends.

    Also, it could happen a combitation of hese factor.

    The company purchase TS for 2,000

    It distribute 1,000 cash dividends

    it paid 1,000 liab

    A long term asset was totaled for 2,000

    This generate a net loss for 1,000

    Explanation:

    2017:

    total assets 17,000

    total liabilities (7,000)

    equiy 10,000

    2018:

    total assets 10,000

    total liabilities (6,000)

    equiy 4,000

    difference; 4,000 - 10,000 = 6,000
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